Thursday, April 11, 2013

More on IT Partnerships

I had a wonderful conversation this morning that finally made me understand my own misgivings about managed service providers (MSPs) and IT vendors. It was actually a conversation about our own business and relationship with our customers (actually members, we're a cooperative). I think I finally understand why I don't trust vendors and why thinking of a vendor as a "partner" is nearly impossible to me.

The problem sums up like this: An MSP/vendor in the IT space assumes a lot of our money but does not assume any of our business risk.

In the case of a financial institution doing business lending you have a lot of risk. When you agree to loan money you become inextricably entangled and self-interested in ensuring the success of the borrower. There is an inherent vested interest in ensuring the growth and continued success of the recipient of the service. You make sure they make the right decisions. You check up on them on a regular basis. You question them when decisions are made that jeopardize their success and your investment.

In the case of an MSP, or any other vendor looking to establish a "partnership" with IT there typically isn't that vested interest. Yes, you can write fancy contracts (if you have the legal team and staff to do so) or you can make the argument that the prospect of continued and expanded business is interest enough. I don't have the resources to demand such a contract and I don't believe that vendors are as driven by continued/expanded business as many people think. This is especially true in the SMB market where contracts are rather small and there's an awful lot of potential customers. Growth is ensured to any vendor as long as they just keep signing on new clients.

So what does a partnership mean to me now? It is a relationship where an MSP/vendor provides me services I need AND assumes enough of my risk to create a vested interest in my success and growth.

I've had close relationships with some vendors and have grown to trust some of their employees. In the case where the employees were also personal friends I've been very comfortable trusting the organization. This is still not a vested interest. Am I going to disown a friend over their employer's bad behavior? Probably not. Trust is not enough. There needs to be a pain point to make sure that everyone is focused on the same goal: success.

Remember - no one is as interested in the success of your business as you are (well...besides your lending institution that is).